In What Way Should Operating Leases Be Accounted for Under

question 48

Multiple Choice

In what way should operating leases be accounted for under IAS 17?

• A)The lease payments should be capitalized and shown on the balance sheet as an asset.
• B)The lease payments must be expensed as they are incurred.
• C)IAS 17 is flexible,allowing both capitalization and expensing of operating lease costs.
• D)The lessee capitalizes the operating lease and the lessor expenses the lease.

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Definitions:

IFRS 10

Refers to the International Financial Reporting Standard that provides guidance on the consolidation of all entities that an investor controls, defining the principles of control and how it should be assessed.

Consolidated Financial Statements

Financial statements that provide a comprehensive overview of a company's financial position by combining the accounts of the parent company with those of its subsidiaries.

Regulatory Organization

An entity established by a government to regulate specific activities, industries, or professions.

Public Market

A transparent and regulated marketplace where securities, commodities, and other financial instruments are traded.